Food prices ‘will increase amid deep loss in Turkish Lira’
Güneş Kömürcüler - ISTANBUL
“We have not forecasted that huge loss in the Turkish Lira’s value. For instance, our company’s year-end projection was 2.7 at maximum before the election, but we have now seen the critical threshold at 3. It is almost impossible for the food sector to endure such big losses in the Turkish Lira’s value. We’ll inevitably see hikes in food prices in the next months as the production costs are increasing,” said local Sezon Pirinç Chairman Mehmet Erdoğan on late Aug. 19, in a meeting with a group of economy journalists in Istanbul.
He noted his company needed to postpone around 8 million euros of investment, as it was now impossible for any companies to forecast what the near future will bring in such an uncertain economic environment.
Turkey has seen a general rise in food prices this year, despite a relative decrease in recent weeks. The Central Bank, for instance, held interest rates steady on Aug. 18, after a drop in food and energy prices eased inflationary pressures, but the government has announced a series of measures to decrease prices, especially on meat, which were already above the global average. In global markets, we see the opposite trend. Prices for major food commodities in global markets in July hit their lowest average monthly level since September 2009, as sharp drops in the prices of dairy products and vegetable oils more than offset some increases in sugar and cereals, according to data from the Food and Agriculture Organization (FAO).
More needed for price setting
Turkey’s government said last week it would monitor food prices, which are rising above general inflation, and take necessary measures to ease the budget burden on Turkish households. The first step will be importing red meat from the European Union with zero customs duty, as was the case for several legumes or vegetables in the past.
“Allowing imports upon zero customs duty when prices get higher leads only to short-term solutions to the problems. Turkey has serious problems in the agricultural sector, as production is decreasing while consumption is increasing. For instance, Turkey produced a total of 2 million tons of legumes in 1990, but this figure dropped to 1 million tons last year. Turkey needs long-term agricultural strategies to make its agricultural sector more productive, to protect its producers and to meet its food needs in the future as a country, which is forecasted to be hit most by global warming in Europe, along with France,” he said.